Posts Tagged ‘caps’

Tort Reform – Consider the Consequences – Lesson #1

Sunday, March 28th, 2010

Lost in all of this discussion about how tort reform and caps on damages will save the medical profession has been a discussion of what is really behind all this nonsense.  The Republicans claim that the reason the healthcare system is broken is because of the rising costs of malpractice insurance due to high verdicts, ‘out of control’ juries, the plaintiff lawyers and every other specious argument that sounds good but has no basis in reality.  Study after study has demonstrated that jurisdictions with caps do not affect malpractice insurance rates.

Has anyone really thought about why these naysayers are incessantly calling for a cap of $250,000 on non-economic damages?  It’s a simple matter of mathematics.  This number is not based in any reality of insurance rates – now is it?  Have you seen a single study that uses this ‘magic number’ to demonstrate how this will save healthcare?  If you have, please share it with the rest of us.  That comment will be posted in a heartbeat.

So what is behind this ‘number’?  What is the usual contingent fee being charged these days – 33 1/3 or 40 percent?  How much does it cost to investigate, file and try to conclusion a medical malpractice case of any consequence?   Answer: it can range anywhere from $75,000 to $150,000 (rough averages but pretty accurate). What is the largest cost?  Answer:  medical experts, who charge anywhere from typically $350 to $1,000 per hour.  What part of the population typically receives less than optimal (read ‘Cadillac’) care – answer: lower income patients without any coverage or without ‘the best coverage. ‘ When those patients seek care, how are those bills often financially covered?  Answer:  Medicaid or Medicare.  Do you have any understanding of what a ‘super lien’ is?  Answer: Medicare and Medicaid have an absolute right to complete reimbursement of any related medical expenses paid out in such cases.

So how do all these numbers, issues and forces play out in the real world of medical malpractice? What effect would a cap of $250,000 on non-economic damages have on whether a bona fide lawsuit (read: awful care causing serious injury) could ever be brought to court?

So that this posting can stay within the realm of reason in terms of length, I’ll just give you the above factors to ponder for a bit.  Later posts will give you more concrete examples of how, in the real world of malpractice cases, these specious arguments for caps and ‘tort reform’ are nothing more than an attempt to deny patients and their families of access to the courts.

Let’s leave you with a thought – a patient on Medicaid receives awful medical care leading to horrible injuries requiring hundreds of thousands of dollars in past and future care needs.   What do you think a client would recover in such a situation under ‘tort reform’ and a cap of $250,000?

Recovery of those costs do not go to the patient but are the subject of a reimbursable lien.  That potentially leaves recovery for non-economic damages only.  Apply a fee of one-third (answer:  just over $80,000) and costs of (let’s say) $125,000 (totally within the ‘usual’ range).  Have you done the math?  That’s about $45,000 to the client.  How does a lawyer satisfy a client’s needs in that scenario?  You can’t.  Do you do the case ‘on the cheap’ and not hire the experts or do the discovery you need to do?  You can’t – that runs the risk for the client of not winning – in which case the recovery is nothing.

Now are you starting to get the picture what is really behind the proposed ‘tort reform’s cap’?  Don’t think for one minute that the medical profession and its insurers haven’t done the math.

More to come….